Industrial-sized credit for LatAm

In January 2008, Votorantim, one of the largest and most successful private industrial conglomerates in Latin America, opened the region’s syndicated loan market with a US$1.3bn multi-tranche senior credit facility. This facility represents the largest debt financing ever raised by the borrower and has been considered a benchmark transaction for prime corporate issuers in 2008.

Despite challenging current market conditions and aggressive terms, the transaction benefited from a significant oversubscription through commitments provided by 17 international financial institutions. Several of these financial institutions were first time participants in syndicated credits for Votorantim.

“The size of the facility, combined with the tremendous syndication success made this deal one of the most visible export financings in the LatAm region,” says Rolf Schmitz, executive director, origination and syndication at WestLB.

The financing is comprised of a five-year US$500mn senior secured export-backed facility, a seven-year US$500mn senior secured export-backed facility and a three-year US$300mn unsecured working capital tranche. WestLB, BBVA, Citigroup and Société Générale acted as joint lead arrangers and bookrunners for the facility.

The proceeds from the facility will be used to extend current debt maturities and fund working capital needs, including a US$25bn investment programme and the acquisition of cement and metals and mining assets. A portion of this will be used to refinance the acquisition of Prestige A/B Ready Mix and Prestige Gunite in the US and the Acerias Paz del Rio acquisition in Colombia, executed by the group in 2007 and financed by the joint underwriters of this facility.

The ability of the joint underwriters to provide the original financing for these acquisitions and their combined structuring and syndication capacity provided Votorantim with a swift and flawless execution of this complex transaction.

“The transaction was noteworthy for its timing,” says Ed Hogan, head (Americas), structured trade finance, Standard Chartered. “Even though credit markets had begun to deteriorate in the last quarter of 2007, Votorantim wisely chose to launch the US$1.3bn syndication, its largest ever, and it successfully locked in attractive borrowing levels before the bankruptcy of Bear Stearns caused severe disruptions in the financial markets. The successful completion of the financing supported Votorantim’s strategic investment plan and broadened its internationalisation into Asia and the Americas.”

Deal Information

Borrower: Votorantim
Amount: US$1.3bn
Joint lead arrangers and bookruners: WestLB; BBVA; Société Générale CIB; Citigroup
Senior mandated lead arranger and administrative agent: Bank of Tokyo-Mitsubishi UFJ
Mandated lead arrangers: Bayern; BNP Paribas; Standard Chartered
Additional lenders: Fortis; Mizuho; Rabobank; Lloyds; Scotia Bank; Intesa; DZ Bank; JP Morgan; Natixis
ECA: Coface
Law firms: Hughes Hubbard & Reed (lenders); White & Case (Votorantim)
Margin: Tranche A: 0.725%; tranche B: 0.825%; tranche C: 0.55%
Tenor: 3-7 years
Date signed: January 2008